Is a Soft Landing in Sight? – September 2023 M&A Activity

[ˌsôf(t) ˈlandiNG, ˌsäf(t) ˈlandiNG]

soft landing (noun) · soft landings (plural noun)

1) a controlled landing of a spacecraft during which no serious damage is incurred.

2) in economics, a cyclical slowdown in economic growth that avoids recession. A soft landing is the goal of a central bank when it seeks to raise interest rates just enough to stop an economy from overheating and experiencing high inflation, without causing a severe downturn.

We noted last month in our annual review of printing, packaging, and related industry transactional activity that the past twelve months were characterized by a dip in the number of deals announced. This was the case in almost every category that we track, except for modest upticks in commercial printing, specialty products, and supplies distribution. (See The Target Report Annual Review: 2023 M&A Activity). Nonetheless, within the context that overall deal activity has cooled off from prior years, there is still a steady cadence of deals across all sectors, some of which will be transformative to our industry over the long term.

The classic signs of turbulence ahead have been in abeyance. Tuck-in transactions, in which the seller’s plant is closed and the business moved to the buyer’s production facility, were at or near historic lows. There were fewer bankruptcy filings in our industry this past year than in any year since we began The Target Report twelve years ago. The number of non-bankruptcy plant closures increased slightly but remained close to the low point we recorded in 2022. As of this writing, the US economy, and our industry along with it, has avoided the hard landing that many predicted as the government largesse ran out and interest rates increased.